Warm welcome or cold shoulder: Alfa Romeo Giulia [w/poll]

Warm welcome or cold shoulder is a new series here on CarSalesBase.com, where we discuss the sales performance of new models in their first year or so on the market. How have they performed in terms of sales: above or under expectations? What could be the reasons for their success or failure? And what do we expect for their future – will it improve or get worse?

First we tackle the Alfa Romeo Giulia, simply because it’s one of the most talked-about launches in recent years and by far the most popular car here on CSB in terms of pageviews. As always, feel free to join the discussion by commenting below or answering the poll at the bottom.

Let’s start with the US, the most difficult market for the Giulia: there have been some articles and comments across the web suggesting the Giulia is a sales failure in the US, pointing out Alfa has only sold 7.900 of them in the first eleven months of this year. Of course, that figure looks a bit bleak when compared to established models like the Audi A4 and BMW 3-Series, which sold almost 30.500 and 54.000 units during that same period. Then again, these brands and models have been around for decades which has given them great brand recognition, a faithful share of repeat buyers and not to forget a much larger dealer network (300 and 341 compared to 184). Alfa Romeo, on the other hand, has not been present in North America for nearly two decades and the few who still remember the brand mostly remember its reputation for poor quality. The US is a mature market and the midsized premium sedan segment is fiercely competitive as even an established brand like Cadillac has had trouble carving out a piece of that pie with the ATS, arguably one of the best cars it has made in a decade. So for a brand that has returned to the market after decades of non-presence, selling an average of 900 luxury sedans a month after its initial launch period is not all that bad.

A better comparison for the Giulia would be the Jaguar XE, another premium mid-sized sedan from a lower-volume luxury brand that was launched a few years ago without a direct predecessor. What’s more, Jaguar has 163 about dealers in the US, more in line with Alfa Romeo’s figure. Jaguar sold about 8.000 copies of the XE in the US in the first 10 months of 2017, not much more than the Giulia has sold, but I haven’t heard a single voice or read a single article claiming the XE is a failure. And keep in mind the Giulia was only launched in the first quarter of this year so its deliveries didn’t pick up traction until the second quarter. From May onwards the Giulia has consistently outsold its British rival. Also, the Alfa has been hampered by some software glitches that not only delayed deliveries but also didn’t do much good to its still very fragile image, proving those critics right that have continued the image of unreliable Italian cars. Not a great way to relaunch a brand and gain confidence from buyers looking to spend upwards of $40,000 on a new car. I think the major reason for the image of “failure” is that the goals set by FCA itself had been set unrealistically high and when the sales figures did not live up to those high expectations, it was easy to call it a failure. If only the company had been a bit more humble (or even just realistic) in their projections, the Giulia would not be considered a mishap. Perhaps the MotorTrend “Car of the Year” award can help put the Giulia on the shopping lists of more Americans, even though I personally take all these different COTY awards with more than a pinch of salt and so should everybody else.

In Europe, the story is a bit different. Italian cars are traditionally known for being very dependent on their home market, with for example 80% of Fiat Panda and 64% of Alfa Romeo Giulietta coming from Italy. By comparison, just 38,5% of the Giulia‘s 19.201 European sales in the first 9 months of 2017 came from Italy, in line with the percentage of German sales for the Audi A4 and Mercedes-Benz C-Class and much lower than the 55% of European Jaguar XE sales coming from the UK. This suggests the Giulia’s appeal is better spread across the continent. The Giulia was behind the German 3 in fourth place of its segment when ruling out coupe/convertible models like the BMW 4-Series and Audi A5 and the Volvo V60 station wagon. It outsold the Jaguar XE and sold almost 4 times as many as the Volvo S60 and Lexus IS, the only other sedan-only alternatives that sell in significant numbers in Europe, where 42% of sales in this segment are station wagons and just 32% are sedans (the rest are hatchbacks like the DS5, 3-Series GT and 4-Series Gran Coupe, or coupe and convertible models). That means the Giulia only effectively competes with less than a third of its segment, resulting in an 11% market share of the premium midsized sedan segment. Not bad for an Italian newcomer in a segment traditionally dominated by the Germans and which is heavily dependent on fleet and lease orders. Those buyers often focus more on total cost of ownership than on purchase price which means resale values play a major factor, something in which the Germans are traditionally strong while the Giulia has no proven track record in that aspect.

So should Alfa Romeo still consider making a Giulia station wagon, as it had for its predecessors 156 and 159? I don’t think it should, as the potential volume for that version, which would really only sell in Europe, is about 30.000 units a year. That’s not enough for a company already struggling for cash, which it could put to better use by developing a replacement to the Giulietta or a crossover below the Stelvio, especially when considering some of the SW sales probably would cannibalize on those of the sedan. Considering the premium midsized sedan segment as a whole is losing share to crossovers like the Volvo XC60, Mercedes-Benz GLC and Audi Q5, the Giulia was facing an uphill battle from the beginning, while the Stelvio is supposed to be the real money (and volume) maker. But in order to (re-)establish the Alfa Romeo brand as a sporty alternative to the Germans and a full-blown luxury brand, the Giulia was needed to give the brand credibility by proving it could compete with them in their traditional stronghold: that of midsized sports sedans in which the BMW 3-Series is still the king of the hill. That’s also why it has focused so much attention on the low-volume, top-of-the-line Quadrifoglio version with 510hp, as that version was able to beat the M3 and rivals on paper as well as on the road. The widespread critical acclaim from press and punters put the Giulia and Alfa Romeo back on the map in Europe and I wouldn’t call it a sales failure at all, even if it hasn’t met the overly ambitious goals set by Sergio Marchionne.

Kriss’ second opinion

I am in two minds about the Giulia’s sales performance. On one hand Bart is absolutely right – if you look at the numbers the right way Giulia’s sales figures looks pretty good for (a) a sedan (b) from a brand that needs to reestablish itself (c) in a crowded market (d) that’s losing volume to crossovers. And if you view the Giulia as a car whose main goal was to put Alfa Romeo back on the map than I would say it has actually been successful – while the sales are so-so, it is viewed as a car that can go head-to-head with the segment’s leaders, unlike for example the compromised Jaguar XE and Cadillac ATS.

On the other hand, however, there is no denying that Alfa Romeo needs to start selling cars now that it has all but killed off the Mito and Giulietta, and in this respect the Giulia is not the success that the brand needs. As such, the acid test will come with the performance of the Stelvio SUV, a car entering a growing segment where established brand values count for less than in the traditional segments. If the Stelvio can generate volume (and profits) for the brand than this will serve as foundation for future growth. So far FCA, and Sergio Marchionne, seem to be determined to drive the brand to succeed. However, as we have seen with Audi’s, Lexus’ and Infiniti’s decades-long journeys, success in the premium segments takes a long time, and even then it is not guaranteed. The Giulia, however, remains one hell of a start for Alfa Romeo.

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About Bart Demandt

Bart is a 36-year old Dutchman who's always had a thing for cars, the automotive industry and statistics. He’s combined these passions by writing about them on CarSalesBase.com. His daily driver is an Alfa Romeo GT 3.2 V6 which he just can't seem to say goodbye to thanks to the mesmerizing exhaust note.
You can find all his articles Here.

Comments

I think the Alfa Giulia is doing well for a car that’s basically new to America. I owned 2 Alfas Before. A 2000 GTV,and the Alfetta GT. I now own a Fiat 500 Abarth and a Maserati Gran Tourismo,and will soon order a 4C,then later a QV Giulia. I think the recent COTY award will help tremendously also.Entering F1 is also a smart move. Seems like it’s all coming together for Alfa Romeo,and I hope FCA will NEVER merge with anyone,as it has the best brands in the business.Period.

I’ve seen my first one on the road yesterday and I realized then how little of these they must sell. Arguably I don’t see any more ATSs or XEs, so I see your point and it is fair, although I do not think comparing the Giulia with cars struggling in the market (even in a struggling segment) is making a point that the car is a success.

I think however that it is fair to criticize FCA’s policy with respect to Alfa when you think about where Alfa was 10 years ago with the 156/159. The roadmap has been terrible since then and there is little to explain the poor choices Alfa made in this timeframe.

I also agree on the fact that it is the Stelvio which is supposed to be the market share killer here, as SUVs are oblivious nowadays. So far, it looks like the model peaked at 2.200 units last June, about 2 to 3 times less than a Q5, and 5/6 times less than a GLC or an XC60. I am very doubtful about the overall success of the duo, considering how little support the brand has and how weak its lineup currently is.

What is Alfa going to do in the next 3 years? I can certainly sketch where Porsche, Mercedes, VW and Audi are going thanks to their concepts / communication. On the other hand, I have no clear view where Alfa, Chrysler or Dodge are going. Jeep does a better job at that. Why are there such disparities in the FCA group?

I think the sales look good both in Europe and in the US.
It was unreasonable to expect the Giulia to sell 30.000 units in its first year in the US. Alfa is an unknown brand, with a small dealer network, so it was unrealistic to expect big sales numbers in the first year. Also, the sedan segment is decreasing in size so the sales numbers are good, considering the performance of its rivals.

Furthermore, I can find a couple of screenshots comparing specific versions of the Giulia to the closest rivals. The Giulia Q is the leader in the high-performance versions of these sedans for example. Considering that the money in the sedan segment doesn’t come from the highly discounted fleet sales but from the more exclusive versions, the Giulia managed to disrupt the money-making sales of the german brands (the M3, the C63AMG, etc).
So in the sedan sales, the Giulia may be the 4th in terms of market share, but restrict the sales of the german cars to the versions with 2.0/2.2 engines and the high performance versions and you’ll see the Giulia up there.
In Europe, I think it is a tremendous success because of this.

As mentioned if they want to have a premium brand they need mid-size and full-size sedans, but the main money makers will be the corresponding SUVs. For jaguar the XE may be a flop but the F-Pace is a homerun. Alfa needs the Stelvio to sell as much as the F-Pace in the US and in Europe.

If they want bigger volume, then they also need a compact SUV. Throw in one or two exotic models and you have a nice niche premium brand selling around 400k units per year.
However, they need to manage better their product launches.

It’s ok in Europe but bad in USA. I’m not sure how well it is selling over here, you see some but really not many. Apparently over here( Slovenia) 45 Giulias were sold this year, 10 of them are sitting on the internet with 0 miles as they are daily registrations. It is however true, that Veloce and QV are way better deal in their respective part of the market than “normal” Giulia. For USA, selling less then half what Alfa sales in EU in such a big market is bad. What is even bigger problem is Stelvio. We will see how this goes.

Awesome to see the Giulia outselling its rivals in the upper specs, that’s great news for the brand. Not just in terms of image but also in terms of profits.

I somewhat expected that Audi gets most of its volume from the lower spec versions and great to see that proven as well. So in terms of volume it may be a tier-1 luxury brand, but not so much in terms of engine specification.

I think Alfa can be happy about the Giulia introduction considering they’ve been absent for 5 years in this segment. Outselling Lexus, Infiniti (both still struggling in Europe) and Volvo (old models) isn’t difficult at all, but compared with Jaguar and even Audi (new A4), they’re doing great! As for the US, the Stelvio will be more important than the Giulia.

i think they need to introduce Giulietta replacement ASAP. If they want to attract younger customers to the brand, as Mercedes did with A class or BMW with 1series, premium compact segment is very important and volume maker in Europe. In that segment you can attract upper class customers with high end spec models, as well as those from non premium compact segment for lower spec if you have good product. Giulietta sales numbers are still higher than Giulias, after almost 8 years on market.

One fact is also to retain is that the last months the dealer in Europe had to buy lot of Giulia ( a tradional FCA method when models not reach the goals) to help the sales..I am not sur that in 1 year the global sales will be as good..

It could sound like a paradox, but I think that the Giulia will sell better in the US, same for the Stelvio. The Giulia is not so distant from XE, S60 and Cadillac ATS; the next year could bring some surprises and the Giulia could easily outsell all the three competitors mentioned. Europe sales are disappointing… I hope they will double next year with the introduction of the 2.2 136hp…

Blaz the 136hp version at the beginning was just for the rest of Europe, not for Italy. But, since in Italy the A4, 3 Series and C Class are mostly sold with entry-level engines like the Alfa’s 136hp, they took a good decision by putting it as the entry-level… Probably the sales will increase in Italy, where the Giulia is struggling

I want to like the Giulia, but it just looks bland and dare I say a little ugly compared to the elegance of the 159.
Over here in Europe, Alfa should replace both the Mito and Giulietta with one new model. It is stupid to not have a car in this market. Seems they are doing with the Mito what they have done with the Punto, just let an old model run and run until the sales disappear completely. I would have considered a Mito once, but the interior was just too cheap and nasty.

“Jaguar sold about 8.000 copies of the XE in the US in the first 10 months of 2017, not much more than the Giulia has sold, but I haven’t heard a single voice or read a single article claiming the XE is a failure.”

Alfistas are much louder than Jag fans. And they are Latin lovers, so they get desperate when they fail.

“But in order to (re-)establish the Alfa Romeo brand as a sporty alternative to the Germans and a full-blown luxury brand, the Giulia was needed to give the brand credibility.

That’s why it has focused so much attention on Quadrifoglio. The widespread critical acclaim from press and punters put the Giulia and Alfa Romeo back on the map in Europe”

Exactly. The Quadrifoglio was designed not to sell massively, but to get massive press coverage.

Alfa’s big problem is the target audience. The young, conspicuous consumers demand luxury level service and sales experience. The economics for delivering this service are not there….with 184 dealers and 7,900 sales…there is no way a dealership can deliver a great sales/service experience. In 11 months the average dealership sold less than 4 vehicles. No dealership, especially new studios, can be profitable at these sales levels. Giving away the cars won’t help..but there are few alternatives.

Well done Bart!
We should mention advertizing.
E.g. every Hollywood movie include BMW, Merc or Audi.Advertising costs are divided into a huge number of models( BMW x1, x2,x3,x4,x5,x6,x7?, 1,2,3,4,5,6,7…and millions of body types).
Alfa need minimaly new mito 4 door, giulietta hach and 4 door cupe (CLA), giulia sedan,vagon, 4 door cupe , new 166 sedan and vagon and 3 SUV models like x1,x5 and stelvio.
For strong dealer network Alfa need models and money for advertizing.One strong dealer is worth more than ten bad ones.
I drive a German company car (strong car dealer cooperates with our company- the only possible choice).My wife can not get over mito but… 2 doors and babies are not a practical solution(Fiesta doing the job).
Plan without new Giulietta in 2017 is suicide.Each year of delay will reduce the volume potential of the new model.
New BMW X4 2018 after only 4 years of poor sales is a good plan!
If FCA does not have money, they need to sell the brand.